Dealing with the death of a loved one is never easy, even when it is expected. Those who are left behind have to deal with the loss. They also have to deal with matters such as probate and other legal issues. One common point is the legality of living in a house that is going through the probate process.
No law states that a property that is going through probate cannot be lived in. Most estate representatives would want someone to live on the property. Here are two main reasons:
.To receive a rental income.
2.To ensure that the property is being properly maintained.
Real Estate Under The Utah Probate Code
Let’s say an individual who owns a home with other people passed away. One of the first questions to be resolved is how he or she held title to the property. In some forms of titles, the owner’s property interest will automatically pass on to the other surviving owners upon death.
If the deceased owned the property in his sole name, the estate would likely go through the probate.
The next thing that has to be considered is if the deceased has left a valid Will. In the state of Utah, a Will is considered valid if it is drafted and executed in the following way:
1. A Will must be in writing (It can be either handwritten or typed)
2. A Will must be signed and dated by the testator
3. Witnesses must sign a Will (at least two witnesses)
4. A Will must identify beneficiaries
A valid Will is likely to name an executor. An executor is a person appointed to administer the estate of the deceased. The executor’s primary responsibility is to carry out the instructions stated in the Will. He should also manage the affairs of the dead person’s estate. In case the Will did not identify an executor, the court will appoint one.
During the probate process, the executor will do his due diligence to perform the discovery process (don’t take the discovery process lightly) and gather all the estate assets. Then, he/she will locate and pay the outstanding debts. Afterward, he/she will locate all the beneficiaries or heirs. The assets of the estate will be given to the beneficiaries named in the Will. If there is no Will, they will pass to the next of kin as per the intestate succession laws. It is important to note that the executor must pay the taxes and estate’s debts before distributing the assets. But, there are cases when the deceased person’s house is heavily mortgaged. There are also situations when the estate has no other assets and has many debts. In these cases, the executor may have to sell the home to pay off the creditors. If there are enough funds to cover the debts, the house will likely transfer to the heir named in the will. The property then will assign under inheritance laws to the closest family members. Under Utah’s inheritance law, if the deceased was married, the surviving spouse would likely take the entire state. Half as his own community property and half as his next of kin.
What Are Probate Assets?
In most states, the personal representative must list all probate assets with their values and file the list with the probate court. You can also think of this as a list of assets for the will. Some assets, like bank accounts, are easy to put a value on. Others, like antiques, jewelry, and collectibles, may require an appraisal.
Probate assets include:
• Real estate, vehicles, and other titled assets owned solely by the deceased person or as a tenant in common with someone else. Tenants in common don’t have survivorship rights. The owners can bequeath their share of the property to someone else.
• Personal possessions. Household items go through probate, along with clothing, jewelry, and collections. The inventory should include the decedent’s personal belongings that remain after death.
In some states, probate isn’t required if the estate’s value is below a certain dollar amount. Some states also have a simplified probate procedure for small estates or when all property is transferred to a surviving spouse. But even when probate isn’t required, going through the process can have advantages. Sorting through property and accounts can be tedious, and it’s not always easy to tell what’s subject to probate and what isn’t. It’s best to get legal advice if you have questions or aren’t sure what property to list with the probate court.
What Is Non-Probate Property?
Because non-probate assets aren’t part of the probate process, they aren’t listed with the probate court. Non-probate property includes:
• Assets titled in the name of a trust or designating a trust as beneficiary. Many people set up living trusts specifically to avoid probate. The trustee named in the trust is authorized to carry out the trust’s instructions, including distributing trust assets to beneficiaries.
• Property with a named beneficiary. Common examples include life insurance policies, IRAs, 401(k)s, and pensions.
• Bank accounts with beneficiaries. These do not go through probate if they have a payable on death (POD) designation. Other property such as real estate or vehicles is non-probate property if there’s a transfer on death (TOD) designation.
• Property owned jointly, with survivorship rights. This means that, if one owner dies, the other owner automatically gets the deceased owner’s interest in the property. Married couples often own their home this way. Look for the words “joint tenancy with right of survivorship” or “tenancy by the entirety” in the title documents.
Once you’ve identified the assets that pass outside of probate, the rest of the decedent’s assets are probably part of the probate estate.
Renting Out A Probate Property
There are no laws that prohibit the renting out of probate property. However, the circumstances in which this is workable and beneficial vary. The situation will continue if the deceased was already renting out the property before his death. The lease signed by the tenants and the now-deceased landlord will remain in full force and effect. What if the lease expires while the home is still going through probate? The executor then will decide whether to continue the rental status of the property. The executor should consider which situation is in the best interest of the estate. The executor should also consider the following factors:
1. Are there debts that cannot be paid without selling the rental property?
2. Did the will name a specific beneficiary to inherit the rental property?
The executor is also responsible for paying the deceased’s bills during the probate. Depending on the executor’s financial situation, the person may find this difficult. Renting out the property of the deceased may be a viable solution. This is a practical option since the probate process can take months or even years. The executor has the power to act on behalf of the estate. But the extent of the executor’s authority varies by state. In some states, executors have the control of renting a property under the laws of probate. In other states, an executor should get court approval first. But there is nothing in the direction that forbids renting a property as it passes through the probate process.
Maintaining a home during probate
It is also the executor’s responsibility to ensure that the deceased’s home is safe and maintained. The executor should keep making mortgage payments. He should also pay local property tax bills to avoid penalties. The executor should also pay any property insurance premiums. If the insurance lapses, and then a fire or theft happened, the executor could be held liable for the loss. It is also the executor’s duty to ensure that the property received essential maintenance such as mowing the lawn and cleaning out the gutters. If there are damages, such as a broken window or a roof that starts to leak, the executor handles the repairs. It’s your job to see that the property receives essential regular maintenance. The yard must be mowed; in Utah’s colder locations like Big Bear, the snow shoveled, the gutters cleaned out. You need to know that the furnace is working in cold weather, so pipes don’t freeze and burst. And of course, you must repair any damage that occurs, such as a broken window or step or a roof that starts to leak.
Here are some tips to keep the home secure and well maintained if it is unoccupied while the probate process is ongoing:
1. Put some lights on a timer to make the place look occupied.
2. Ask a neighbor to pick up any free newspaper or flyers that get deposited on the porch or in the yard.
3. Close all doors and windows and lock these where possible.
4. If you don’t live close enough, find someone you trust to check up on the property every week to ensure everything is okay.
5. Turn off any unnecessary utilities.
6. Remove items of value for safekeeping until they are distributed to the beneficiaries. Make sure to keep a record of these items.
Selling a house in probate
Selling probate real estate is different from a traditional home sale. There are timelines to be aware of and procedures to follow. You cannot take any action until you have authority from the Utah probate court. This includes the sale of real estate. Legally navigating the process is no easy feat. That is why it is important to have expert help.
How to Avoid Probate Using A Revocable Living Trust
Living trusts were invented to let people make an end-run around probate. The advantage of holding your valuable property in trust is that after your death, the trust property is not part of your probate estate. (It is, however, counted as part of your estate for federal estate tax purposes.) That’s because a trustee not you as an individual owns the trust property. After your death, the trustee can easily and quickly transfer the trust property to the family or friends you left it to, without probate. You specify in the trust document, which is similar to a will, whom you want to inherit the property.
Pay-on-Death Accounts and Registrations
You can convert your bank accounts and retirement accounts to payable-on-death accounts. You do this by filling out a simple form in which you list a beneficiary. When you die, the money goes directly to your beneficiary without going through probate. You can do the same for security registrations, and, in some states, vehicle registrations. More than half of the states also now allow transfer-on-death real estate deeds that take effect when you die.
Joint Ownership of Property
Several forms of joint ownership provide a simple and easy way to avoid probate when the first owner dies. To take title with someone else in a way that will avoid probate, you state, on the paper that shows your ownership (a real estate deed, for example), how you want to hold title. Usually, no additional documents are needed. When one of the owners dies, the property goes to the other joint-owner—no probate involved.
You can avoid probate by owning property as follows:
• Joint tenancy with right of survivorship. Property owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies.
• Tenancy by the entirety. In some states, married couples often take title not in joint tenancy, but in “tenancy by the entirety” instead. It’s very similar to joint tenancy but can be used only by married couples (or in a few states, by same-sex partners who have registered with the state). Both avoid probate in exactly the same way.
• Community property with right of survivorship. If you are married (or in Utah, if you have registered with the state as domestic partners) and live or own property in Alaska, Arizona, California, Idaho, Nevada, Texas or Wisconsin, another way to co-own property with your spouse is available to you: community property with the right of survivorship. If you hold property in this way, when one spouse dies, the other automatically owns the asset.
Giving away property while you’re alive helps you avoid probate for a very simple reason: If you don’t own it when you die, it doesn’t have to go through probate. That lowers probate costs because, as a general rule, the higher the monetary value of the assets that go through probate, the higher the expense. And most gifts aren’t subject to the federal gift tax.
Free Initial Consultation with Probate Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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West Jordan, Utah
84088 United States
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